Hybrid value chains represent one of the most promising collaboration models for involving major companies in projects with social impact. The model was put forward by the founder of Ashoka, Bill Drayton, together with Valeria Budinich at the Harvard Business Review: “Today, companies have the opportunity to collaborate with social sector organizations on large-scale problems that neither of the two sectors (social and private) have been able to resolve alone. The power of such associations lies in the way that the strengths of the participants complement each other: companies offer scale, manufacturing and operational experience and finance. Entrepreneurs and social organizations contribute with reduced costs, well-established social media and a far-reaching understanding of customers and communities.”
The critical link for these hybrid value chains lies precisely in social entrepreneurship, which enables us to speak the language of both the private and social sectors and understand what motivates each of them. In hybrid value chains, corporations don't get involved from a traditional CSR perspective but rather in the search for a competitive strategic advantage that the social sector can provide. By exploiting this opportunity, and thanks to the innovative ideas given to them by social organizations and their assistance in implementing them, companies can make an enormous social impact by doing what they do best, providing products and/or services.
One of the most interesting examples of hybrid value chains occurs in the health sector, specifically in micro health insurance. This is the case with the initiative launched by Ashoka and the Healing Fields Foundation in India. In collaboration with major insurance companies, these organizations are pushing forward with social innovations in microinsurance which, implemented on a large-scale basis, have the potential to transform the lives of millions of people.
Social organizations help to define very precisely which insurance packages are most needed and appropriate for the vulnerable people the service is intended for. They also have a realistic appreciation of the ability of these people to pay (in terms of both quantity and method) making it possible to innovate in the design of the product and the structure of its costs. Additionally, they help to reduce marketing costs due to their knowledge on the ground and they provide training so that people can learn to appreciate the value of insurance. For its part, the company is able to offer the product on a very large scale right from the very beginning which means that their efforts can be profitable even though margins per unit are tight. Ashoka supports the design of business models on behalf of the companies that are not damaging to the social objectives of the initiative. Ultimately, millions of people could have access to better quality medical services. They would be more inclined to seek medical assistance at the first sign of an illness rather than waiting until very serious life-threatening symptoms develop which prevent them from working to be able to feed their families, also generating huge hospital expenses.